In the lead-up to last week’s election, I was inundated with messages and calls asking for my thoughts on potential tax changes and advice on what actions to take.
Unfortunately, I had misplaced my crystal ball (does that reference make me sound old!?).
We didn’t know which party would come into power, though we could make an educated guess. The manifestos were mostly vague, and it was unclear what exactly each party would implement if they won.
Now that we have the certainty of a Labour government, what does this mean for us small business owners and entrepreneurs?
Here is a very quick recap of the main tax changes mentioned in Labours manifesto:
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VAT on Private School Fees but no change to main VAT rate
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Corporation Tax to remain unchanged
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Removal of age bands for National Minimum Wage
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Changes to employee rights
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No changes to Income tax rates
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“Reform” of Captial Gains Tax - currently, this relates specifically to the way Private Equity Fund managers are paid but there are rumours other reforms in this space could be on the agenda
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“Abolish the Non-dom loophole.”
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No references to Inheritance Tax but again, there are plenty of rumours that labour will look closely at this, especially Business Relief
Timeline for changes
Firstly, we are not likely to see any immediate changes to our tax system. We expect an Autumn statement, possibly as early as mid-September, where they will set out some of the details around fiscal and tax policies.
We do not yet know whether this will be more of a full budget or a mini-budget, with the full budget to follow in March.
Either way, it’s unlikely we will see any retrospective tax changes. We are far more likely to see any announcements start from the 5th of April 2025, or, for more major changes, a consultation first.
So, my message to everyone is not to panic. Carry on as you are, use up all the available tax allowances and reliefs, and prepare for change. Change will come; it may be small or big. Hopefully, it will be positive, but we wait and see.
I am not hugely political and certainly not loyal to any party. However, I do take a keen interest in how I think each party and its policies will impact taxes and the small business economy. I wasn’t impressed with any of the main parties' attitudes to small business. I do know that it has been harder and less rewarding than ever to run a business over the last few years. Perhaps I was overly optimistic in the hope of seeing major policies to overturn this trend. Perhaps we still will.
Either way, all of us business owners know one simple fact. We can never rely on anyone else to make our journey a success. It’s all down to us!
Onwards and upwards!
About the author
Luke Desmond
Fractional CFO for Tech, eCommerce & SaaS. CEO @Crisp_Acc provides virtual finance functions. Co-Founder @getvaulta SaaS Startup for accountants.